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Tuesday, June 19, 2012

Corporate Court Sides with Big Pharma in Overtime Pay Case

The Supreme Court gives another example
of how real life isn't like the movies.

In the 2010 romantic comedy Love and Other Drugs, Jamie Randall was a pharmaceutical representative who ensured that the products of his employer, Pfizer, were prescribed more often than its competitors’. He worked hard and, thanks to Pfizer’s revolutionary new treatment for erectile dysfunction, succeeded in replacing many pharmaceutical products with their Pfizer equivalents.

Those who have seen the movie will remember Jamie’s great success upon Viagra’s entry into the market. They might also remember that Jamie was eventually offered a huge promotion.

But for real-life drug rep Michael Shane Christopher, employed by SmithKline Beecham, life has not been so charmed.

Michael, like Jamie, does not actually sell pharmaceutical products directly to patients or to pharmacies. Just like Jamie, his job is to meet with doctors to persuade them to prescribe SmithKline products. Michael, like Jamie, worked long hours to make SmithKline products more competitive in the pharmaceutical market. But unlike Jamie, Michael will never earn the pay he deserves.

Many could consider Michael’s job as a drug rep to be less than admirable. After all, if Love and Other Drugs had an underlying purpose, it was probably to shed light on the pharmaceutical industry’s shady operations.

But federal law does not afford fair pay only to those whose jobs are popular or likable. The Fair Labor Standards Act (FLSA) does not make any employee more deserving than the next, but rather entitles all workers to certain rights and guarantees. That is unless a major drug company decides to argue semantics with the Supreme Court. When that happens, all bets are off.

Enter Christopher v. SmithKline, a Supreme Court decision announced on Monday, June 18, in which SmithKline successfully defined Michael as an “outside salesman” not entitled to overtime pay. Under FLSA, outside salespersons are one of several narrowly-drawn classes of employees exempted from the overtime pay requirement. Congress tasked the Department of Labor with defining those classes, which they did by reaching the outrageous conclusion that salespersons must, in fact, make sales. The Department of Labor argued exhaustively that since a drug rep like Michael does not make sales, he must not be an “outside salesman.” Case closed, right?

Wrong. The Corporate Court disagreed with the Department of Labor and ruled that Michael should be denied overtime pay.

In a narrowly divided 5-4 decision written by Justice Alito, the Court found that the Department of Labor’s definition of an “outside salesman” was invalid because – essentially – it was too obvious. The conservative majority held that, because the agency simply “parroted” the FLSA language, it had no reason to rely on its interpretations.

After hearing oral arguments in this case, it seemed unlikely that the Court would side with SmithKline. Chief Justice John Roberts insisted that, at the end of the day, drug reps “don’t make sales.” Justice Sonia Sotomayor worried that defining drug reps as outside salesmen might serve to exclude all those involved in promotional work from overtime pay.

SmithKline’s counsel Paul Clement, who also argued the challenge to the Affordable Care Act, responded that drug reps “make sales in some sense” and that the Department of Labor’s definitions were “inconsistent with the statute.”

Note to the editors of the Oxford English Dictionary: being a “salesperson” no longer requires making any actual “sales.”